KGL – A Test Case on Sanctions?

A Whistleblower Alleges Death Threats

Kuwait and Gulf Link Transport Company (KGL), a major U.S. military contractor, is facing renewed allegations that it is working with Iran, possibly violating U.S. sanctions. In the political climate where sanctions on Iran are one of the few things people can agree on, KGL may become a test case for what happens when a U.S. contractor violates those sanctions.

Adam Zagorin – (POGO) – April 4, 2012 – If there’s one thing most Americans support in foreign policy, it’s sanctions against Iran to halt its alleged drive for nuclear weapons. From President Obama to Mitt Romney, Rick Santorum, and Newt Gingrich, leading candidates all want to put the economic squeeze on Tehran and to signal their support for Israel. President Obama recently announced he will ratchet up sanctions on the country’s oil exports and declared a “national emergency” to deal with the Islamic Republic. The Senate will try to iron out its differences over anti-Iran measures in coming weeks, as bus stations around Washington, DC, are studded with advertisements questioning the President’s resolve on the issue.

And that’s why the current situation surrounding one big military contractor known as Kuwait and Gulf Link Transport Company, or KGL, seems so puzzling. Amid renewed allegations that the Kuwait-based behemoth is involved in dealings with Iranian shipping interests, ports, and front companies, KGL continues to hold up to $1 billion worth of contracts with America’s armed forces. No contractor to the U.S. military has ever been debarred for doing business with Iran, so KGL could emerge as a test case.

At the Pentagon, its number two official has repeatedly told skeptical Members of Congress that KGL is free of ties to Iran and has broken no law. Yet documents reviewed and interviews conducted by POGO show that the FBI and the Pentagon’s own Defense Criminal Investigative Service (DCIS) are apparently conducting a non-public probe of KGL that is at least a year old, taking evidence from former employees and others about alleged business dealings that could violate Iran sanctions laws.

The upshot is that instead of projecting a message of American resolve and clarity, the case of KGL seems to offer an ambiguous quagmire of mixed signals as key issues surrounding the company remain to be sorted out. Indeed, as the undisclosed federal probe of KGL drags on, the giant logistics provider continues to have access to U.S. military facilities and provide support for American troops in the tense Gulf theater.

The Pentagon Response: All is Well

The letter from the Pentagon, dated July 15, 2011, was polite.

And categorical.

Addressed to Senator Mark Kirk (R-IL), it said that, “we have found no substantial information” to support reams of internal company documents purporting to show KGL’s illegal business ties to Iran. Kirk had provided the documents to the Pentagon, and asked for an explanation.

Sen. Kirk is not the only Member of Congress upset about KGL’s supposed ties to Iran. In fact, the company has long been a nexus of controversy over Iran and other matters. Sen. Claire McCaskill (D-MO), who chairs the Senate Subcommittee on Contracting Oversight, Sen. Marco Rubio (R-FL), who sits on the Intelligence Committee, and Sen. Tom Coburn (R-OK), Ranking Member of the Permanent Subcommittee on Investigations, as well as current and former House Members Brad Sherman (D-CA) and Ron Klein (D-FL) have all posed their own pointed questions about ties to Iran, and received similar assurances from Carter.

Now, months after Carter’s last public pronouncement on the issue, Sen. Bob Menendez (D-NJ) is expressing his own concerns. On March 19, 2012, he sent a letter to the Treasury and its Office of Foreign Assets Control (OFAC), which draws up the official language defining U.S. sanctions against Iran. Menendez’s new letter cites a number of the same troubling issues about KGL and Iran that Carter knocked down last year, with a few additional queries of his own. Menendez also says this:

I understand that the FBI and Defense Criminal Investigative Service may be actively investigating these allegations [about Iran].

What Gives? An Ongoing U.S. Probe

As the Iranian nuclear crisis continues to occupy center stage, POGO has seen evidence of what Menendez alluded to in his letter: an undisclosed, apparently ongoing, multi-agency U.S. inquiry into KGL, an investigation that seems aimed at answering the same questions about ties to Iran that Dep. Sec. Carter told Members of Congress are groundless.

As one witness in the case told POGO several weeks ago, “The investigators are very clearly looking for evidence that any U.S. [military contract] money went to Iran.”

In light of the apparent probe (unmentioned in any of Carter’s letters to lawmakers), his assurances that everything is fine appear, at the least, incomplete and possibly misleading. According to documents and interviews, the FBI, the Defense Criminal Investigative Service, and other U.S. agencies have been actively examining links between Iran and KGL—a process that apparently began well before Carter sent many of his reassuring letters and that seems to be continuing.

KGL has long denied any intentional links to banned entities in Iran, and continues to do so in a little-noticed lawsuit pending in Washington, DC. In the lawsuit, the company does acknowledge a few past ties to Iranian shipping interests, but claims they were quickly severed after the U.S. imposed a ban on those enterprises. KGL also claims that allegations of its continuing connections to Iran originate in “fabricated” documents given to Members of Congress, who, in turn, sent queries to the Pentagon and elsewhere—all part of what the company calls a slander campaign tied to one of its chief competitors and others.

“This case is very difficult and political, even within the U.S. Government, and there is little that we can do to protect you…”

But the FBI’s probe apparently remains active. A number of sources close to the case report that as recently as January 2012, federal agents pulled a senior KGL executive out of line for hours of questioning about the firm’s ties to Iran as the executive tried to enter the country, supposedly at Washington’s Dulles airport. It has been impossible to officially verify these accounts of the incident. Neither the FBI nor KGL would deny it occurred. Both declined any comment. An FBI spokesman noted that Bureau policy in many cases precludes confirming an investigation, or discussing what, if anything, might be involved.

A lawyer speaking on KGL’s behalf also would not comment on whether the firm faces an ongoing federal inquiry. The lawyer added that if there were such a probe, KGL would be cooperating fully.

KGL, which trades on the Kuwait stock exchange, participates in U.S. military contracts worth up to $1 billion. Last May, KGL won a share of a five-year, $870 million contract with the U.S. Army to provide logistical services in Kuwait, Iraq, and Saudi Arabia. In February 2011, it was awarded a U.S. military storage contract that could be worth up to $157 million. The contracts required the company to certify in writing that it is not engaged in business activity with Iranian entities subject to sanctions under U.S. law. A KGL executive, who is an American citizen, signed at least one of the certifications.

As for Dep. Sec. Carter at the Pentagon, it’s unclear whether he was aware of FBI and DoD inquiries at the time he gave KGL a clean bill of health last year in letters to lawmakers. Made aware of questions raised by Sen. Menendez about a federal investigation of KGL, a Pentagon spokesperson told POGO that Carter’s position on KGL was unchanged.

“We’ve checked again carefully, gone through all our databases, and we have no indication of any changes,” the spokesperson said.

7 Comments

This is so well hidden in the upper echelons of the US Govts that we may never know if KGL is in business with Iran. If Credible Criminal evidence were to ever surface, it would by far be the biggest breach in US Contracting History. So here we have it, no one in Govt/both Parties wants egg on the face of our Govt, so the best thing to do is keep it covered until the contracts are expired.

AND just who are these investigators going to be that are NOT the puppets of the ARMY and DLA.

Geez. Future Services and KMS were listed on the front page of the news paper in MAJ John Cockerham’s bribe ledger book and COL Alexander even had it translated and read to him by an Official Translator and those 2 companies are still doing business with the United States.

Sorry – The DoD IG are only doing what someone bird dogs them to do and going after KGL is the job of United States Patriots like MS SPARKY and Pam Robinson and Congress Members that are not patsies to KGL lobbyists.

Taking down KGL will take an Agency with integrity that is not compromised by the wishes of their superiors. Rebels and Citizens and Congress will do what the DoD IG have failed to do. Suspend and debar KMS, FS and KGL.

So how about them apples. AGILITY wanted to put KGL in the same hot water they are in.

Who all out there have been answering John Doe subpeonas for KGL ?

How is it that KGL is getting $ 1 Billion in contracts. How many were not competed DLA.

Remember that sweetheart deal you wrote KGL DLA. 6 years of DDKS with an AWARD fee 2% higher than KBR.

KGL must be really on the good side of someone at DLA. Who and how much are they getting in kickbacks and bribes.

A good investigator would be able to figure it out. But no, it will take Congress to shut down KGL and do what Pam was trying to get done. The $ 8 Million judgment should have stayed in place.

What do we have – Judges pandering to the KGL family who are judge half Iranians. Way to go Judge. Cheat an American family in favor of of an Arabic company making $ 1 Billion a year in contracts. That is damn unpatriotic Judge.

Anyway – glad to hear that damn Scott Wilson has been found. My lawyer is going to be damn glad about that.

What is the address that you should be served at KGL and Agility ?

If I remember right – you guys are using trying to say you don’t have an address and you are playing our All-American game. U.S. Government Contracts and that is rule number 1. Your address. It took the Judge how long to get KGL served ?

Get this, since I am in Kuwait and a fan of this site, it seems funny that since this Article was introduced I am given a warning about it’s certificate and whether or not to Proceed. It seems KGL has some pull with the IP ADDRESS PROVIDER HERE IN KUWAIT. CREEPY STUFF!

I have VIVA and don’t receive any such warning and KEMS also doesn’t cause such a warning.

Maybe you are on Camp Arijan- Land of the Free – where MS SPARKY is censored so that soldiers are not informed about what might help them recover damages against Prime Contractors like KBR and ITT.

FREE SPEECH is NOT WHAT THE U.S. ARMY are all about. They are about concealment of U.S. Taxpayers money and hiding what they are spending it on because they are having a $ 2 Billion spending spree with their friends.

Not at all on Camp Arifjan. I have Wataniya. Checked my Norton URL Safe sites and Ms. Sparky is rated as SAFE. It may be a third party, anyway it just seemed strangely coincidental that it happened soon after this KGL Affair was posted. Ya just never know.

Maybe it is some strings the new conservative MPs have introduce. Who knows. Kuwait is a strange land where the crimes of Foreign DoD Contractors do not get punished and are in fact for the most part covered up. Only Americans suffer. It is interesting the it took the American Judicial system and American Lawyers and American Investigators to uncover what one Kuwait DoD Contractor did to another DoD Contractor – both of whom have received $ Billions of U.S. Tax Payer dollars and the Americans cannot charge them or convict them. Why is that ? I guess KGL is not going to be giving Christmas presents to Agility this year. : – )